STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2023

The Directors present their Strategic Report and the audited financial statements for the year ended 31 December 2023.

PRINCIPAL ACTIVITIES OF THE GROUP

Windar Photonics is a technology Group that has developed LiDAR wind sensors and a related software suite designed to efficiently and cost effectively increase the power output and reduce the lifetime operating costs of electricity generating wind turbines. LiDAR wind sensors in general are designed to remotely measure wind speed and direction.

The Group's key physical products are the WindEYE™ and WindVISION™ sensors which measure the wind speed at different measuring points by scanning a laser beam ahead of the wind turbine. By measuring the wind speed a variety of wind information is derived such as wind direction, turbulence, wind shear, wind gust and wake detection. The products and various algorithms are designed for the general optimisation of wind turbines both in respect of increasing the Annual Energy Production and general load reduction options.

The Group has recently developed and implemented the first phase of its Nexus software platform to support the data driven management of the improvement of performance of individual wind turbines and in future turbine farms.

REVIEW OF THE BUSINESS

The Chairman's Statement  includes a general review of the Group's business for the year.

FUTURE DEVELOPMENTS IN THE BUSINESS

Independent Power Producers (IPPs) and Wind Park Operators are primarily interested in general optimisation of existing wind turbines thereby potentially increasing power output. One method of achieving this is by optimisation of the yaw alignment of the wind turbine, meaning that the wind turbine is better facing the wind. This can be obtained by fitting a LiDAR wind sensor such as the WindEYE™ sensor. Windar's sales progress in 2023 marked a breakthrough year for the Group and this has again seen transformational development through a significant new customer relationship in North America. In April 2024 we signed a significant €1.2m order with this North American client as a first stage in addressing the substantial opportunity.

As well as including the sale of a number of WindVISION sensors the North American order also marked the first revenue from services related to our Nexus software platform. This platform will increasingly be the foundation for future developments in the provision of enhanced services giving clients with our WindEYE and WindVISION products the opportunity to realise performance improvements beyond the core wind alignment benefits from installation of our hardware. The data and benefits from utilising current and future Nexus software modules will optimise alignment, operating hours, planned maintenance and operating life of individual turbines as well as incremental benefits from the consolidation of data and response across wind farms.

GROUP RESULTS AND DIVIDENDS

In the year ended 31 December 2023, Windar Photonics achieved revenue of €4.8 million (2022; €1.9 million) from sales of WindEYE^TM and WindVISION^TM sensors and related services which represent a revenue increase of 157% from 2022. The total gross profit for the year amounted to €2.4 million (2022; €0.9 million) representing an increase of 154% from the prior year.

The Group loss for the year before taxation and exceptional expenses decreased to €0.35 million (2022: €1.3 million).

No dividends are payable for the year under review (2022: No dividends payable).

CAPITAL INCREASE

Following the period end, in April 2024, the Group raised £4.4m (before expenses) of capital through the issue of 12,631,426 Ordinary Shares at an undiscounted price of 35p per share. The Capital was raised in order to provide the Group with the working capital necessary to satisfy demand for its products and increased balance sheet strength.

PRINCIPAL RISKS AND UNCERTAINTIES

Sales cycle and product acceptance

As with many large projects the successful addition of a client and the successful installation of the Group's product for a potential client can entail a long sales cycle, which often also involves protracted negotiations and meeting detailed technical specifications and requirements, the length of which may adversely affect the Group's financial situation and cash flow and increase project costs. Furthermore, there can be no guarantee that the commencement of such negotiations will result in successful addition of a client and, as such, significant time may be spent, and expense may be incurred without return for the Group.

As the Group increases its presence in the market and is undertaking projects with IPP, Wind Farm Operators and OEMs the sales cycle risk is reduced, as there are more potential clients, and the non-conversion of any potential client is less of a risk to the business. As the Group continues to grow this risk will become a normal trading risk.

Products and services failure

Quality is critical to the Group's business solution. While the Group's technology is complete and extensive security and scalability testing has been carried out, a major system defect, due to design mistake or technology failure could impact upon current and future customer demand. This may lead to adverse press and market commentary

damaging the reputation of the Group, and require rectification costs and/or claims against the Group. Further, all sales made by the Group are made with a two-year warranty with the first sale having been made in the fourth quarter of 2013. No major claims have been made under such warranties and the Group has worked with its customers to enhance the installations on site to date but there can be no assurance that the Group will not incur significant liabilities in satisfying warranty claims in the future.

The Group has not had to initiate a product recall. However, it may be exposed to product recalls if its products are faulty or if regulations are breached. If the Group has to recall products, it may incur significant and unexpected costs and damage to its reputation. The Group has implemented quality control procedures to mitigate this risk.

Reliance on suppliers

The substantial part of subcomponents that are assembled into the WindEYE™ and WindVision™ sensors are manufactured and supplied by third parties. It may be difficult to replace any of these subcomponents if there was an interruption in the supply, consistency, quality or timely delivery or an increase in costs above the forecast levels, which could adversely affect the Group's operating results or harm its reputation. Any such interruption where the Group is unable to locate and engage an alternative within a reasonable time and at an acceptable cost may result in the Group being unable to offer its services or products or a material interruption in the provisions of its services or products, which in turn may have a material adverse effect on the Group's business and prospects.

Other commercial factors

The Group is still in an early business cycle stage and now entering the next higher growth cycle means that the Group will be exposed to a higher concentration of single customers and/or contracts. In 2023 this was illustrated by the fact that 2 customers accounted for 55% of the annual Group revenue (2022: 2 customers, 64%). New orders received post the period end are expected to significantly reduce concentration in 2024 and beyond. The Group is aware and is paying attention to the potential commercial risk this development brings. One of the ways to mitigate this risk going forward is to continue to focus strongly on both ongoing, but just as important, new OEM projects with the view over time to developing a broader customer base.

Being in an early business cycle the Group has been dependent on financing the business through placing of shares in the market primarily to finance annual losses generated in the Group. The Group is aware of the risks associated with being dependent on such capital sources. The focus in the Group to mitigate this risk is to arrive at a position where any potential future share placings primarily will be needed for financing of working capital and not financing of annual losses. Following the April 2024 share issue, no further issues are anticipated.

Reliance on key personnel

The Company's future success is substantially dependent on the Group's ability to attract, train, motivate and retain key management, commercial and technical personnel with the necessary skills and experience. There is no guarantee that the Group will be successful in attracting and/or retaining key personnel. The loss of any of these key personnel for whatever reason may have a material adverse effect on the future of the Company's business.

Confidentiality

In order to protect its proprietary technology and processes, the Group relies on confidentiality agreements with employees, licensees, independent contractors and other third parties. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of disclosure of confidential information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of the Group's proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect the Group's competitive business position.

SECTION 172 OF THE COMPANIES ACT 2006

The Directors are well aware of their duty under Section.172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard (amongst other matters) to:

• the likely consequences of any decision in the long term;

• the interests of the Company's employees;

• the need to foster the Company's business relationships with suppliers, customers and others;

• the impact of the Company's operations on the community and the environment;

• the desirability of the Company maintaining a reputation for high standards of business conduct; and

• the need to act fairly between members of the Company.

The Board recognises that the long-term success of the Group requires positive interaction with its stakeholders. Positive engagement with stakeholders will enable our stakeholders to better understand the activities, needs and challenges of the business and enable the Board to better understand and address relevant stakeholder views which will assist the Board in its decision making and to discharge its duties under Section 172 of the Companies Act 2006. The comprehensive interaction with stakeholder incorporates among others regulatory announcements as well as direct communication between Shareholders and the Board.

In Windar Photonics, we set an honour in building long-term corporate relationships, with both suppliers, customers and development partnerships, which has been an essential part, since the incorporation of the Group and is still today a fundamental part of our progress.

One of the biggest assets in Windar Photonics PLC is our team members. Their hard work and personal commitment are highly valued and is the cornerstone for the continued positive future journey for the Group. We will continue to ensure the well-being, embraced their ambitions and empower them, as an essential part of our Group. 

KEY PERFORMANCE INDICATORS

The Group considers the revenue, the EBITDA development, cash balances, levels of debt, and employee numbers as the current key performance indicators of the business as it has been in a start-up phase.

Revenue for the year was €4.8 million (2022: €1.9 million) representing an increase of 157% and Gross Profit showed an increase of 154%.

EBITDA gain, representing the loss from operations and adding back the depreciation and amortisation charges of €0.2 million (2022: €0.2 million), amounted to €0.1 million (2022 loss: €0.8 million).

At 31 December 2023 the Group had cash balances of €0.2 million (2022: €1.4 million).

Trade receivables at the end of the year increased to €0.5 million (2022: €0.4 million).

The Group's loans at 31 December 2023 amount to €1.8 million (2022: €1.9 million) of which €0.5 million (2022: €0.2 million) is classified as current.

Employee numbers at 31 December 2023 were 29 (2022: 23).

BY ORDER OF THE BOARD ON JUNE 29, 2024

Jorgen Korsgaard Jensen

Director

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2023

The Directors present their report and the Financial Statements for the year ended 31 December 2023.

FUTURE DEVELOPMENTS

The future developments for the Group are discussed in the Chairman's Statement and the Strategic Report.

GROUP RESULTS AND DIVIDENDS

The Group results and dividends are shown in the Strategic Report.

DIRECTORS

The Directors of the Company during the year were:

Jørgen Korsgaard Jensen

Johan Blach Petersen (resigned on 9 April 2024)

Paul Joseph Hodges

Andrew John Richardson

David George Lis (appointed on 6 October 2023)

Gavin Maxwell Manson was appointed on 14 February 2024.

DIRECTORS' INTERESTS

SIGNIFICANT SHAREHOLDERS

Shareholders who have notified the company of shareholdings in excess of 3% as at 31 December 2023 and at 26 June 2024 are as follows:

DIRECTORS' BIOGRAPHIES 

David George Lis (Non-Executive Chairman), aged 74

David George Lis is an experienced non-executive director within investment and fund management. David joined Norwich Union Investment Management in 1997 (later merging to form Aviva Investors), before becoming Head of Equities in 2012 and latterly Chief Investment Officer, Equities and Multi Assets, until his retirement in March 2016. David is currently the Chairman of WildLife Group Limited, the Senior Independent Director of Melrose Industries plc and Hostmore Plc and a Non-Executive Director of Dowgate Capital Limited. He has previously held the position of Senior Independent Director of Electra Private Equity plc as well as being a non-executive director of BCA Marketplace plc and the Multifamily Housing REIT plc.

Jørgen Korsgaard Jensen (Chief Executive Officer and Founder), aged 61

Jørgen Korsgaard Jensen is an expert in optical technology solutions and has been involved in Research & Development projects in the field of optical technology in collaboration with the Danish Technical University, DTU for more than twenty years. Prior to that he held leading positions in international companies with responsibilities for strategy, finance, purchasing and logistics. He is the chief executive and founder of OPDI Technologies A/S, which is a technology incubator company focused on development of opto/electronic sensors primarily for consumer electronic products.

Further, he is chief executive of WaveTouch Group Limited, which develops and markets optical touch screen technologies.

The businesses of Windar Photonics and WaveTouch Group Limited were both initially created by, and are derived from businesses within OPDI Technologies A/S.

Paul Joseph Hodges, aged 64

Paul Joseph Hodges has had a career in the City of London, spanning 40 years, as an investment analyst, stockbroker and corporate financier. During this period, Paul has held prominent roles at S G Warburg, James Capel, Schroder Securities, Collins Stewart and Cenkos plc. Paul was a founding partner of Cenkos, a main board director and a central figure in the firm's landmark deals. He now acts as an independent consultant. Paul has a B.Sc(Economics) degree in Econometrics from the London School of Economics and a M.Sc degree in Management Science from Imperial College, London.

Andrew John Richardson, aged 59

Andy is a non-executive chairman, director and board advisor who helps businesses to achieve success. Andy has a wealth of expertise across a range of organisations at CEO, Chair and non-executive levels, including having been Chairman of Rubicon Partners Industries, CEO of Arc Specialist Engineering Limited and CEO of Metalrax Group Plc. He has a strong track record in business transformation, scale-up and international development in quoted, private equity and family office ownership structures. He has a demonstrated history of success internationally in the manufacturing sector including Automotive, FMCG, Medical Devices, Aerospace, Off-Highway, Engines, Consumer Products, Safety Products, Building Products. Andy was educated at Cambridge University holding two degrees, M.A. and M.Eng. Andy loves helping people to succeed.

Gavin Maxwell Manson, aged 58

Gavin Manson is an experienced non-executive director and CFO. He is currently CFO of agriculture and engineering group Carr's Group plc and is a Non-Executive Director of healthcare group Meallmore Ltd. He was previously Chairman of Hostmore plc and between 2016 and 2022 was Chief Financial and Operating Officer of Electra Private Equity PLC having previously held senior finance positions in a number of listed companies including Thomas Cook Group plc, Premier Farnell plc and Merck KGaA.

DIRECTORS' REMUNERATION

The value of all elements of remuneration received by each Director in the year was as follows:

QUALIFYING THIRD PARTY INDEMNITY PROVISIONS

The Company has put in place qualifying third party indemnity provisions for all of the directors of Windar Photonics Plc.

FINANCIAL INSTRUMENTS

Currency

The Group reports its revenues and costs in €, whilst some of these revenues and costs may arise in currencies other than this including, inter alia US Dollars, Pounds Sterling, Chinese Yuan and Danish Krone. As a result, the Group is exposed to risks associated with fluctuations in foreign currency exchange rates, which may adversely affect the Group's reported profits or make its overseas contracts relatively less valuable. In particular, customers are invoiced in their local currency rate, which may in the future give rise to material currency exposure risks. The Group does not currently engage in any currency hedging although as the business expands and foreign currency exposure increases the Group will consider options to mitigate the exposure to foreign currency movements.

Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, the Group finances its operations through a mix of equity and borrowings. The Group's objective is to provide funding for future growth and achieve a balance between continuity and flexibility through its bank facilities and future intergroup loans.

The Board receives cash flow projections on a regular basis as well as information regarding cash balances. At the end of the financial year these projections indicated that the Group is expected to have sufficient liquid resources for a period of at least twelve months from the date of signing of these financial statements, to meet its obligations.  Accordingly, the Board has adopted the going concern basis. See note 3 for further details.

CREDIT RISK

The Group regularly reviews and assesses the trade receivables for impairment and considers the market risk in respect of the trade receivables. As the Group trades with a concentrated number of customers the Group has reviewed trade receivables on an individual basis. The Group has made a provision against overdue trade receivables of € Nil (2022: € Nil). The Group considers the followings events as indicators of an impairment:

·      default of payments of the counterparty;

·      financial difficulties of the counterparty;

·      it's becoming probable that the counterparty enters bankruptcy or other financial reorganisation;

·      granting to the counterparty a concession that the Group will not otherwise consider.

EMPLOYMENT POLICIES

The Group is committed to employee involvement in the business and there are consultative procedures available for management and other employees to discuss matters of mutual interest.

The Group has a policy of non-discrimination in respect of sex, colour, religion, race, nationality or ethnic origin and the recruitment of disabled persons is only subject to any overriding consideration of access and safety.

TREASURY POLICY

The Group has adopted formal treasury policies to control its financial instruments. It is a Group Treasury policy not to undertake transactions of a speculative nature. Group cash flows are managed centrally and surplus cash is invested in short-term financial instruments.

Compliance with these policies is monitored by the Board.

RESEARCH AND DEVELOPMENT

The Group continues to undertake R&D into LiDAR technology. During the year the Group spent €1,517,237 (2022: €994,713) on R&D of which €493,436 (2022: €311,262) has been capitalised as an intangible asset as shown in note 17 to the financial statements.

The Group has received public Research and Development Grants of €165,223 (2022: €121,019) in respect of the capitalised research and development. At the end of the year, 2 development projects are ongoing which are supported by public Research and Development Grants and outstanding grants which can be claimed in the coming two years amount to €51,127 (2022: €209,754).

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Director's Report, the Corporate Governance Statement and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the Group and company financial statements in accordance UK-adopted international accounting standards ("IFRS").  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and company and of the profit or loss of the Group for that period.  The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. 

In preparing these financial statements, the directors are required to:

·        select suitable accounting policies and then apply them consistently;

·        make judgements and accounting estimates that are reasonable and prudent;

·        state whether the Group and Parent Company financial statements have been prepared in accordance with IFRSs as adopted by the United Kingdom, subject to any material departures disclosed and explained in the financial statements; and

·        prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

WEBSITE PUBLICATION

The directors are responsible for ensuring the annual report and the financial statements are made available on a website.  Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the company's website is the responsibility of the directors.  The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

AUDIT INFORMATION

The directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, there is no relevant audit information of which the Group's auditor is unaware.

Each of the directors have confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Group's auditor is aware of that information. 

AUDITORS

A resolution to re-appoint Gravita Audit Limited as the Company's Auditor will be proposed at the Annual General Meeting.

BY ORDER OF THE BOARD ON JUNE 29, 2024

Jorgen Korsgaard Jensen

Director                                                                      

The Group has elected to follow the QCA guidelines in respect of Corporate Governance, which is also published on the Company's website.

In common with other organisations of a similar size, the Executive Director is heavily involved in the day-to-day running of the business. The Board of Directors meets regularly and is responsible for formulating strategy, and for the trading subsidiaries, monitoring financial performance and approving major items of capital expenditure. All Directors have access to the advice and services of the Company Secretary.

BOARD OF DIRECTORS

The Board includes a minimum of three Non-Executive Directors. The Board has scheduled meetings every second month for each year and others as required. The Board retains full responsibility for the direction and control of the Group. No strategic powers have been delegated and for these reasons the Board did not have, during the year, a formal schedule of matters specifically reserved to it.

There is currently no formal agreed procedure for Directors in the furtherance of their duties to take independent professional advice as necessary at the Company's expense.

NON-EXECUTIVE DIRECTORS

The appointment of Non-Executive Directors is a matter for the Board as a whole based on recommendations from the Nominations Committee. Although recommended by the Code, there is currently no formal selection process. The Non-Executive Directors have contracts for services for an unspecified period. Non-Executive Directors are subject to re-election every three years.

Terms and conditions of appointment of the Non-Executive Directors are available for inspection.

EXECUTIVE DIRECTORS

Directors are appointed by the Board of Directors but stand for election by the shareholders at the Annual General Meeting. The Executive Directors are subject to re-election every three years.

The Company holds board meetings regularly throughout the year. Seven scheduled board meetings were held during the year, as well as one audit committee meeting, one remuneration committee meeting and one nomination committee meeting. Attendance by board members is shown below.

In the event that Board approval is required between Board meetings, Board members are emailed the details, including supporting information in order to make a decision. The decision of each Board member is communicated and recorded at the following Board meeting. Board members are aware of the time commitment required when joining the Board.

BOARD COMMITTEES

Audit Committee

During the year to 31 December 2023, the Audit Committee comprised Johan Blach Petersen, Paul Joseph Hodges and Andrew John Richardson and was chaired by Johan Blach Petersen. Andrew John Richardson now chairs the Committee. The Audit Committee meets at least once a year and is responsible for reviewing the annual and half-yearly financial statements, the system of internal controls and risk management, and the terms of appointment and remuneration of the auditor. It is also the forum through which the auditor reports to the Board. The Audit Committee is also responsible for reviewing the objectivity of the external auditor and the terms under which the external auditor is appointed to perform non-audit services.

The Group's auditor also attends the Audit Committee at its request and reports on its work procedures, the quality and effectiveness of the Group's accounting records and its findings in relation to the Group's statutory audit. The Audit Committee will meet with the auditor at least once a year.

During the year the committee worked with the Group auditors, on the findings of the 2022s audit as well as reviewing the company's full year results on behalf of the Board. It considered significant accounting policies, ensured compliance with accounting standards and considered reports from the external auditor on accounting topics of a judgemental nature requiring attention. The Committee, where necessary will have had separate discussions with the auditor without management being present on the adequacy of controls and any judgemental areas, as well as feedback on the audit.

Nomination Committee

The Nomination Committee comprises David George Lis, (Johan Blach Petersen prior to the appointment of David George Lis), Andrew John Richardson and Paul Joseph Hodges and is chaired by David George Lis. It meets at least once a year and otherwise as required. The Nomination Committee considers the composition of the Board, retirements and appointments of additional and replacement directors and makes appropriate recommendations to the Board.

Remuneration Committee

The Remuneration Committee comprises Andrew John Richardson, Paul Joseph Hodges and Gavin Maxwell Manson (from his appointment on 14^th February 2024) and is chaired by Paul Joseph Hodges. It meets at least once a year and is responsible for reviewing the scale and structure of the executive directors' remuneration and the terms of their service or employment contracts, including any share options granted and other bonus arrangements. The remuneration and terms and conditions of the Non-Executive Directors are set by the entire Board.

The remuneration committee has decided that the Executive Director should receive remuneration from 1^st January 2024.

The Non-Executive Directors were awarded remuneration for their services during the year.

During the year no granted share options lapsed and 2,256,956 new share options were granted during the year.

PERFORMANCE EVALUATION

There is currently no formal performance evaluation of the board, its committees, and its individual directors. A modus operandi for the evaluation of the board is currently under consideration, but not implemented at the current stage of the Group's development, as the Group is still a fairly young and small business unit.

COMMUNICATION WITH SHAREHOLDERS

The Directors are available to shareholders at any time to discuss strategy and governance matters.

In addition, all Group announcements are published on the Group's website, together with financial results.

All shareholders have the opportunity to ask questions and express their views at the Company's Annual General Meeting, at which all Directors are available to take questions.

AUDIT AND INTERNAL CONTROL

The primary role of the Audit Committee is to keep under review the Group's financial systems and controls and its financial reporting procedures.  In fulfilling this role, the Committee receive and review work carried out by the external auditors and their findings.

The Board has overall responsibility for operating and monitoring the system of internal control within the Group and for monitoring its effectiveness. The system includes an on-going process for identifying, evaluating and managing significant business risks. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group's system is designed to provide the directors with reasonable assurance that any material problems are identified on a timely basis and dealt with appropriately.

Guidance to Directors of UK Companies on internal control procedures and good practice on risk management is provided by the Financial Reporting Council.

The Audit Committee reviews the effectiveness of the internal controls on an annual basis on behalf of the Board and considers that they comply throughout the year ended 31 December 2023 with those provisions of the Code which they consider to be practicable and appropriate for a relatively small public company.

The key elements of the system, which are designed to meet the specific needs and business risks of the Group, include:

·      clearly defined organisation structures with segregation of duties wherever practicable;

·      agreement of Group short term financial objectives and business plans;

·      quarterly review by the Board of Group management accounts and monitoring of results against budgets;

·      Board control over treasury, taxation, legal, insurance and personnel issues;

·      Board control over appraisal, review and authorisation of capital expenditure.

In common with organisations of similar size the Executive Director is heavily involved in the day to day running of the business. The directors believe that although the Group's controls may be slightly less formal than those of larger groups, the close involvement of the Executive Directors more than compensates for this.

The Board believes that it is not currently appropriate for the Group to maintain an internal audit function because of the small size of the Group.

The Audit Committee considers the independence and objectivity of the external auditor on an annual basis, with particular regard to non-audit services.  The split between audit and non-audit fees for the year and information on the nature of the non-audit fees appear in note 9 to the financial statements.  The non-audit fees are considered by the Committee not to affect the independence or objectivity of the auditor.  The Audit Committee monitors such costs in the context of the audit fee for the year, ensuring that the value of non-audit services does not increase to a level where it could affect the auditor's objectivity and independence. The Audit Committee also received an annual confirmation of independence from the auditor.

GOING CONCERN

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further expansive description can be found in Note 3.

CORPORATE GOVERNANCE STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

Windar Photonics plc - QCA Code

As Chairman of the Board of Directors of Windar Photonics plc ("Windar Photonics", "the Company" or "the Group" as the context requires), it is my responsibility to ensure that the Company has both sound corporate governance and an effective Board.

As Chairman, my responsibilities include leading the Board effectively, overseeing the Company's corporate governance model, communicating with shareholders, and ensuring that good information flows freely between the Executive Directors and the Non-Executive Directors in a timely and efficient manner.

In line with the AIM Rules, which require all AIM-listed companies to adopt and comply with a corporate governance code, the Board of Windar Photonics plc has adopted the Quoted Companies Alliance Corporate Governance Code (the "QCA Code").

The QCA Code states that "the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term."

It is the Board's responsibility to ensure that Windar Photonics plc is managed in the long-term interests of all shareholders and stakeholders in the business.

The Board believes a strong and effective corporate governance culture is critical in this respect as we endeavor to grow a resilient and sustainable business for the benefit of our shareholders and all stakeholders.

The Board considers that the Group complies with the QCA Code so far as it is practicable having regard to the size, nature and current stage of development of the Company, and will disclose any areas of material non-compliance.

The QCA code is constructed around 10 broad principles and the report below sets out how we comply with the code at this time. Compliance with the code will be reviewed and updated annually.

David George Lis

Chairman